Contents
World Liberty Financial’s Foray into Stablecoins
World Liberty Financial, spearheaded by former U.S. President Donald Trump, has ventured into the crypto realm with plans that stir quite a buzz. Earlier this month, they unveiled their native token. Now, they’re reportedly setting sights on something grander—introducing their own stablecoin, potentially substituting the venerable U.S. dollar. Decrypt reports rather interestingly on this ambitious undertaking.
The Stablecoin Scene
Now, what precisely is a stablecoin, you might ponder? A stablecoin is a type of cryptocurrency pegged 1:1 to a fiat currency, like the dollar or euro. They’ve become all the rage in recent years. Should reports about World Liberty prove accurate, they’ll join an elite list, including the likes of PayPal, Coinbase, and Robinhood. These titans are delving into stablecoins themselves.
Creating a stablecoin, however, is not just a walk in the park. It demands a swathe of capital and navigating murky regulatory waters. Consider the goliaths of this arena, Tether and USDC, that World Liberty must contend with.
Development Hurdles
Indeed, the development of the World Liberty stablecoin is no small feat. According to a confidential insider at Decrypt, the team faces the challenge of crafting a stablecoin both secure and ready for market launch. The process is akin to taming a shrew; slow and deliberate.
Monetary backing serves as the ballast for the value of stablecoins. Collateralization ensures that value remains steadfast. Past attempts to circumvent this often implode, evidenced by the catastrophic collapse in 2022 of Terra. That debacle decimated billions and serves as a cautionary note to the unwary.
New Leadership
Savvy observers might’ve sensed this stablecoin endeavour in its nascent stage. A significant clue was the recruitment of Rich Teo, a co-founder of Paxos. He’s earmarked as World Liberty’s stablecoin and payments lead. Paxos, a known entity, champions the U.S. dollar-backed Paxos Standard Token, or PAX. Having such expertise on board certainly bodes well for this venture.
World Liberty’s Vision
World Liberty Financial was born in early September, startlingly close to an election, unfolding a narrative unto itself. They describe themselves as a "decentralized finance money market". Their governance token, WLFI, enables holders to propose, govern, and shape this intriguing project. Notably, this token is encumbered—it doesn’t generate any yield and cannot be transferred.
In a bid to gather momentum, World Liberty primed a whitelist enriched by over 100,000 accredited investors. Their goal set at a lofty $300 million. However, they’ve just managed to amass a mere $14 million, only letting go of 4.7% of their tokens.
Conclusion
Despite all these formidable hurdles, the potential profit looms tantalizingly. Tether, deemed the world’s largest stablecoin, declared a record-smashing $5.2 billion profit in the first half of 2024. Success in this venture could therefore spell fortune for the Trump clan. Learn more about this enthralling crypto world through short, insightful lesson cards in Fortune’s Crypto Crash Course.
In the end, it remains to be seen how this all pans out. Nonetheless, the stakes are unprecedentedly high.
